International Reserves—Too Much of a Zipf’s Thing

Author/Editor:

Mariusz A. Sumlinski

Publication Date:

January 1, 2008

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Concentrated distribution of international reserves is puzzling. I show that the growth rates of international reserves bear only a very weak relationship to their initial stocks (scaled by GDP or in absolute terms), and that, by implication, the cross-sectional distribution of reserves conforms to Zipf's law. The law states that the size of reserves is inversely related to their ranking. Evidence in favor of the law is strong and time robust. I compare the crosssection distribution of international reserves embedded in the WEO projections to that implied by Zipf's law and find that international reserves are much less concentrated in the WEO projections than implied by Zipf's law.

Series:

Working Paper No. 08/11

Subject:

English

Publication Date:

January 1, 2008

ISBN/ISSN:

9781451868739/1018-5941

Stock No:

WPIEA2008011

Format:

Paper

Pages:

19

Please address any questions about this title to publications@imf.org